City brokers were split on either side of the coin after Lonmin (LON:LMI) revealed a new strategy, which involves a US$400mln rights issue cash call.
JP Morgan, which this morning upgraded the miner to ‘overweight’ from ‘neutral’, reckons the plans “should see the group survive” low platinum prices and the next three years at least.
“Essentially, the group must address a liquidity crunch to see it benefit from higher PGM prices we see from 2017,” JP Morgan analyst Allan Cooke said in a note.
“Assuming the proposed $400m rights issue is successful and it secures amended debt facilities as planned, the stock is undervalued in our base case numbers.”
JP Morgan’s price target, meanwhile, rises from 30p to 35p per share, which suggests some 18% upside to the current price of around 29.5p.
Elsewhere, analysts at Liberum Capital have downgraded Lonmin to ‘sell’ from ‘hold’.
City brokers were, however, more unanimous in their view of Pearson (LON:PSON) after the publisher – and recent seller of the Financial Times for £844mln – yesterday issued a profit warning.
The disappointing news sent the shares 16% lower on Wednesday, and this morning’s broker reading can’t have been much comfort either.
Barclays Capital and Nomura – already indifferent in terms of recommendations – sharply cut their prices to 990p and 1100p respectively from 1200p and 1280p.
JP Morgan’s Mark O’Donnell highlighted what he described as “incremental concerns” as he downgraded Pearson to ‘neutral’ from ‘overweight’ and cut the target to 1080p from 1365p.
Recruiter SThree (LON:STHR) was downgraded by Credit Suisse to ‘neutral’ from ‘outperform’, with the price target dropping to 385p from 410p. Analysts in the London offices of the Swiss bank say there’s now limited upside for the share, as they revise their views across the professional staffing sector.
Robert Walters (LON:RWA) and Hays (LON:HAS) are also downgraded by the bank, albeit the former retains an ‘outperform’ rating with a lower price target. Hays is cut to ‘neutral’ from ‘outperform’, and its target is reduced to 150p from 175p.